Jun30
By Byron Dorgan
Skyrocketing gas prices have Americans outraged — and rightfully so. Nothing in the fundamentals of supply and demand justifies a doubling of oil prices in a year.
I and others have pushed for investments in renewable energy, conservation and expanded domestic production, but we also need to bring immediate relief at the gas pump.
The most effective way to put instant downward pressure on gas prices is to crack down on oil speculators.
There is a carnival of speculation in the energy futures market. Speculators make money hand over fist while American families get stuck with the bill each time they fill up their tank. Skyrocketing gas prices are damaging our economy.
Every day, 20 times more oil is traded than delivered. Because of the way energy trades are regulated (or not regulated), speculators control vast amounts of oil by putting down as little as 5% of the purchase cost.
In short, speculators use money they don't have to buy oil they'll never get. The market is treated like a 24-hour casino while the regulators are asleep.
Some say oil speculation isn't a problem, that it doesn't affect gas prices. But plenty of experts disagree. An international investment firm recently said, "We are seeing the classic ingredients of an asset bubble." They called it "oil dot-com." I agree.
I believe in markets, but the energy market is broken. It's our job to fix it so legitimate trading is protected.
I've introduced legislation to wring the excess speculation out of the marketplace, and to restore the market's original purpose of allowing producers and consumers of energy to hedge their risks.
My legislation, called the "End Oil Speculation Act," would shut down casino-like betting. It does not affect legitimate hedging, but it would require energy speculators to put 25% down on their trades, instead of just 5%, and would convene an international group to ensure speculators can't go offshore to hide their trading.
We have a choice. Do we sit back and watch this energy bubble grow as it hurts our economy, or do we take steps to stop the speculation that is driving up energy prices?
This is one bubble that I can't wait to burst.
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